Patsy's Italian Restaurant, Inc. v. Banas

• Decision Date: 09 September 2008
• Docket Number: No. 06-CV-0729 (RER).,No. 06-CV-5857 (RER).,06-CV-0729 (RER).,06-CV-5857 (RER).
• Citation: 575 F.Supp.2d 427
• Parties: PATSY'S ITALIAN RESTAURANT, INC., Patsy's Brand, Inc., Plaintiffs, v. Anthony BANAS d/b/a Patsy's, Patsy's Pizzeria, Defendants. Patsy's Italian Restaurant, Inc., Plaintiff and Counterclaim Defendant, v. Anthony Banas d/b/a Patsy's and Patsy's Pizzeria Trattoria Impazzire, Allan Zyller d/b/a Patsy's and Patsy's Pizzeria Trattoria Impazzire, Al & Anthony's Patsy's, Inc., I.O.B. Realty, Inc., and Patsy's, Inc., Defendants and Counterclaim Plaintiffs.
• Court: U.S. District Court — Eastern District of New York

575 F.Supp.2d 427

PATSY'S ITALIAN RESTAURANT, INC., Patsy's Brand, Inc., Plaintiffs, v. Anthony BANAS d/b/a Patsy's, Patsy's Pizzeria, Defendants.

Patsy's Italian Restaurant, Inc., Plaintiff and Counterclaim Defendant, v. Anthony Banas d/b/a Patsy's and Patsy's Pizzeria Trattoria Impazzire, Allan Zyller d/b/a Patsy's and Patsy's Pizzeria Trattoria Impazzire, Al & Anthony's Patsy's, Inc., I.O.B. Realty, Inc., and Patsy's, Inc., Defendants and Counterclaim Plaintiffs.

No. 06-CV-0729 (RER).

No. 06-CV-5857 (RER).

United States District Court, E.D. New York.

September 9, 2008.

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Norman H. Zivin, Robert Thomas Maldonado, Tonia A. Sayour, Cooper & Dunham, LLP, New York, NY, for Plaintiffs*Counterclaim Defendant.

Cesar Augusto Fernandez, New York, NY, Paul Grandinetti, Rebecca Stempien, Levy & Grandinetti, Washington, DC, Steven M. Levy, Gary, IN, for Defendants*Counterclaim Plaintiffs.

OPINION & ORDER

RAMON E. REYES, Jr., United States Magistrate Judge:

More than five years ago, the Court of Appeals for the Second Circuit admonished the major parties in this litigation "that henceforth they would be well advised to minimize the risk of confusion by identifying their restaurants by the complete names: `Patsy's Italian Restaurant' and `Patsy's Pizzeria.'" Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221 (2d Cir.2003). This lengthy Opinion and Order is written because the parties have largely ignored that admonition. During the intervening years, the parties have instead continued on an oftentimes labyrinthine course of litigation. As noted by the Court of Appeals, one source of this litigation's "unavoidable confusion" has been the fact that, for over sixty years, the major parties and their predecessors have shared the mark PATSY'S for nearly identical restaurant-related services, both within the same New York City market. See Patsy's Brand, Inc., 317 F.3d at 217. Additional confusion occurred during proceedings before the Patent and Trademark Office (the "PTO") and the Trademark Trial and Appeal Board (the "TTAB"). These proceedings have been alternately described as "protracted and convoluted," Patsy's Italian Rest., Inc. v. Banas, 508 F.Supp.2d 194, 203 (E.D.N.Y.2007), and "a procedural morass," "tortured" and "resulting in confusion and mistake." I.O.B. Realty, Inc. v. Patsy's Brand, Inc., TTAB Cancellation Nos. 92028142 & 92029614, at 10, 15 (June 28, 2007) (unpublished decision submitted as Defs.' Ex. III, herein "TTAB Decision"). Such was the muddled state of affairs that formed the starting point for this case.

As this case made its way toward a jury trial, its "convoluted" and "tortured" procedural history presented considerable practical challenges in resolving the thorny legal and factual issues raised by the parties' simultaneous and long-standing use of the mark PATSY'S. In coping with these challenges, the Court was reminded that trademark law's fundamental purpose is to not only "encourage investments in strong trademarks, but also `to protect the ability of consumers to distinguish among competing producers.'" Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 539 (2d Cir.2005) (quoting Park `N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985)) (emphasis added). As described in greater detail below, the jury's findings in this case make clear that consumers are having grave difficulties distinguishing between the parties' marks. It is with this in mind, and for the foregoing reasons, that the Court makes the following rulings on the parties' post-verdict motions for injunctive relief: (1) the PTO is ordered to cancel Plaintiffs' registration number 3,009,836 for the stylized mark PATSY'S PR for restaurant services; (2) the PTO is ordered to cancel Plaintiffs' registration number 3,009,866 for the unstylized mark PATSY'S for restaurant services not including pizza; (3) the PTO is ordered not to restore I.O.B. Realty, Inc's registration number 2,213,574 for the mark PATSY'S PIZZERIA for restaurant services; (4) Plaintiffs are enjoined from using the mark PATSY'S alone in any advertising, signs, menus or anything similarly associated with their restaurant services; and (5) Defendants are enjoined from using the mark PATSY'S alone in any advertising, signs, menus or anything similarly associated with their pizzeria services. Additional injunctive relief is granted to Plaintiffs as described below. See infra Section III.D. The parties remaining motions are denied.

BACKGROUND

I assume familiarity with the facts of this case, including the procedural history and facts described in previous decisions in this case and in the "Sauce Litigation."¹ I do acknowledge that a full understanding of this Opinion and Order requires extensive prior knowledge of this case. It is simply an impossible and unwieldy task to include a complete set of facts and procedural history in a single document. The blame for this unfortunate situation lies with the convoluted and protracted manner in which the parties allowed this litigation to progress.

Instead, I will describe only so much of the background as is necessary to understand my rulings. Further, the reader is directed to the previous decisions in this case. Moving from oldest to most recent, a time line of the pertinent decisions in this action is as follows: Patsy's Italian Rest., Inc. v. Banas, 2006 WL 3478988 (E.D.N.Y. Nov.30, 2006) (Docket Entry 32)² (Irizarry, J.) (affirming my order that this action be consolidated); Patsy's Italian Rest., Inc. v. Banas, 2007 WL 174131 (E.D.N.Y. Jan.19, 2007) (Docket Entry 67) (Irizarry, J.) (granting in part plaintiffs' motion to quash subpoena of plaintiffs' counsel); Patsy's Italian Rest., Inc. v. Banas, 508 F.Supp.2d 194 (E.D.N.Y.2007) (Docket Entry 110) (Irizarry, J.) (granting in part defendants' motion to correct the PTO register and denying defendants' remaining motions for summary judgment); Patsy's Italian Rest., Inc. v. Banas, 2007 WL 3232232 (E.D.N.Y. Oct.31, 2007) (Docket Entry 117) (Irizarry, J.) (denying plaintiffs' motion for reconsideration of the Court's order to correct the PTO register); Patsy's Italian Rest., Inc. v. Banas, 531 F.Supp.2d 483 (E.D.N.Y.2008) (Docket Entry 124) (Reyes, J.) (granting defendants' motion in limine to exclude expert's proffered testimony); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 495568 (E.D.N.Y. Feb.20, 2008) (Docket Entry 130) (Reyes, J.) (denying plaintiffs' motion to amend action number 06-CV-5957 to add Patsy's Brand, Inc. as a plaintiff); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 795341 (E.D.N.Y. Mar.24, 2008) (Docket Entry 175) (Reyes, J.) (rulings on the parties' motions in limine); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 850151 (E.D.N.Y. Mar.26, 2008) (Docket Entry 177) (Reyes, J.) (reversing prior ruling and ordering that witness's videotaped deposition is admissible); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 926401 (E.D.N.Y. Apr.3, 2008) (Docket Entry 188) (Reyes, J.) (denying plaintiffs' motion to reconsider plaintiffs' motion to dismiss defendants' counterclaim).

I. The Parties

This case involves two long-standing and well-known eateries, each located in New York, New York, and each bearing the name "Patsy's."³ Plaintiff Patsy's Italian Restaurant, Inc. ("Patsy's Italian Restaurant") is a famous establishment located at 236 West 56th Street in New York, New York. Patsy's Italian Restaurant was founded by Patsy Scognamillo, and after his death has been continuously owned and operated by Mr. Scognamillo's son, grandson and other family members. (See 3/31/08 Tr. at 41:18-43:22; 4/1/08 Tr. at 186:21-189:10.)⁴ Patsy's Italian Restaurant is well-known for its "red-sauce" style Neopolitan, fine-dining cuisine. (See 3/31/08 Tr. at 42:15-43:5, 46:20-25; 4/1/08 Tr. at 190:21-191:3; Pls.' Exs. 19, 26-29.) As stipulated by the parties prior to trial, Patsy's Italian Restaurant has been in continuous operation since 1944. (See Docket Entry 132 at 13 ¶ 3.) Affiliated with Patsy's Italian Restaurant is plaintiff Patsy's Brand, Inc. (collectively, "Plaintiffs"), which was formed in 1993 to market and sell pasta sauces and other packaged food products bearing the PATSY'S mark. (See id. ¶ 4.)

Just across town, Defendant I.O.B. Realty, Inc. ("I.O.B. Realty") owns and operates an establishment called Patsy's Pizzeria at 118th Street and First Avenue in East Harlem, New York (the "East Harlem Location"). Patsy's Pizzeria was founded by Patsy Lancieri and his wife Carmela Lancieri, who owned and operated the establishment after Mr. Lancieri's death. (See 4/1 Tr. at 207:4-208:22, 217:11-23.) Defendants claim that the East Harlem Location was established in 1933, although Plaintiffs hotly contested this fact at trial. Patsy's Pizzeria is no longer in the hands of the Lancieri family. Instead, in 1991 a principal of I.O.B. Realty purchased Patsy's Pizzeria, including any goodwill in the mark PATSY'S PIZZERIA from Carmela Lancieri. (See Defs.' Exs. G, H.) Starting in the 1990s, I.O.B. Realty began entering into licensing agreements that allowed others to open establishments bearing the mark PATSY'S PIZZERIA. Two such licensed locations spurred the foregoing case.

In July 2005, defendants Anthony Banas ("Banas") and Anthony & Patsy's, Inc. (collectively, the "Staten Island Defendants") opened a restaurant at 1949 Richmond Avenue, Staten Island, New York (the "Staten Island Location"). (See Docket Entry 132 ¶ 6.) The Staten Island Location bore a sign that read "PATSY'S" in scripted font along with the words "Since 1933" in smaller type, below which were the words "PIZZERIA • RESTAURANT • BAKERY • CAFÉ." (See Pls.' Ex. 4.) The Staten Island Location closed in September 2006. (Docket Entry 132 ¶ 7.) Thereafter, in November 2006, defendants Banas, Allan Zyller ("...